Louis Dreyfus 2013 profit falls due to U.S. drought

PARIS (Reuters) — Global trading group Louis Dreyfus Commodities B.V. reported a sharp fall in full-year net profit on Wednesday as an improved second-half performance failed to offset a first half hit by a severe U.S. drought.

Louis Dreyfus is the “D” of the so-called ABCD majors that dominate trade in agricultural products, alongside Archer Daniels Midland, Bunge and Cargill.

The worst drought in half a century in the United States in 2012 curbed global grain output the following year and sent prices soaring, cutting volumes and processing margins for traders such as Louis Dreyfus that do business all along the agricultural supply chain.

A shift to ample grain supply pushed up its margins in the latter part of 2013, Louis Dreyfus Commodities said, echoing comments made by its three rivals in their most recent earnings reports.

Its adjusted net income from continuing operations fell to $640 million last year from a record $970 million in 2012, the trading group said in an annual results statement.

Second-half profits were in line with the average of 2009-2011, excluding Brazilian subsidiary Biosev, the group said. For the first half, it had reported $258 million in net income from continuing operations.

The 163-year-old group, still controlled by the founding Louis-Dreyfus family, said full-year net sales rose to $63.6 billion from $57.1 billion in 2012, supported by a 10 percent increase in shipped volumes.

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Capital expenditure increased to $689 million last year from $652 million in 2012.

The company made a series of investments along its supply chain in the past year, including the creation of a joint venture to develop a commodity port terminal in major grain exporter Ukraine.

Louis Dreyfus also said in Wednesday’s statement that it was developing a port on the Azov Sea for an expected launch in 2015. It did not say whether the port would be located in Ukraine or Russia or provide any other details.

The group said its financing had been boosted by two further bond issues last year, which followed its first-ever foray into bond markets in 2012.

Louis Dreyfus Commodities has stopped short of listing its shares. Serge Schoen, former chief executive and now supervisory board chairman, said last year it might need to go public in the next five years to get more access to capital.